60 Years of Nearshoring: A Historical Exploration of US Production Shifting to Mexico

Today, nearshoring refers to the relocation of production facilities from China to North America, principally Mexico where low-cost labor and proximity to the U.S. market are important. This trend, though not new, has gained momentum in recent years as American and foreign producers seek lower produ...

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Bibliographic Details
Published in:Policy File 2024
Main Author: Gantz, David A
Format: Report
Language:English
Subjects:
International
Manufacturing
Outsourcing
Online Access:Request full text
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Summary:Today, nearshoring refers to the relocation of production facilities from China to North America, principally Mexico where low-cost labor and proximity to the U.S. market are important. This trend, though not new, has gained momentum in recent years as American and foreign producers seek lower production costs for labor-intensive components and finished products. Moving production facilities to other nations has been occurring in one form or another - initially in the form of “offshoring” from the U.S. - for most of the past 60 years. Mexico has historically been a preferred destination due to its proximity to the U.S. and its reliable, low-cost, and young workforce. This report offers a historical review of offshoring/nearshoring to Mexico since 1965. It examines the evolution of historical events and trade agreements that have made nearshoring possible, as well as the factors contributing to the uncertain outlook for foreign investment in Mexico’s near future. Understanding this historical context may help potential investors, policymakers, and other stakeholders better understand the current surge in Mexican nearshoring and its future prospects.